Conservatives' favorite health-care solution--high-deductible insurance plans supplemented by health savings accounts--is turning out to be a little more wrinkly than they might hope it to be:
The sharp increase in high-deductible health insurance plans is creating a headache for hospitals and other health care providers who are finding it increasingly difficult to collect the portion of bills due from individuals. [. . .] Recent changes in federal law allowing quicker funding of health savings accounts also might help individuals to pay, officials say.In other words, more people are starting to default on the payments due to their providers, payments that used to be made by insurance companies. Since this is a story from the business section of the Milwaukee Journal Sentinel, the focus from there on out is on how bad this is for providers and businesses. There is no discussion of what the implications are for the patients--oops, sorry, that should be consumers, to use the parlance.
The problem, however, is real for area medical providers. For example, in the first nine months of last year, the proportion of accounts receivable due from individuals using Advanced Healthcare grew from 22% to 29%. Advanced is a large physician practice based in Germantown. Other area providers report similar increases.
What it says to me, as a layperson, is that these kinds of high-deductible plans are not having the effect the conservatives desire. The idea behind these plans is that by giving, er, consumers more control over how their health care dollar is spent (in part by making them pay more of it out-of-pocket), consumers will eschew both unnecessary and unnecessarily expensive procedures. The HSAs help by setting aside a pre-tax lump of income dedicated to paying medical expenses.
There are all kinds of theortical problems behind these kinds of plans. (Seth is the expert.) But here we see the faults in practice, rather than in theory. And the practice seems to mirror what we already know about consumers--we don't always make the most informed or most affordible choices. I mean, forget about regular consumer debt, and realize that even before the coming explosion of these high-deductible-plus-HSA plans, more than 40% of us already have trouble paying our medical bills--including those of us with insurance. Put more of the costs into the hands of the patients--dangit, consumers--and two things will almost certainly happen: One, the predictions of increasing default as outlined in the Journal Sentinel story will come true; two, there will be a sharp increase in the already-booming medical bankruptcy field.
So my question is simple: Who could possibly think that a continued push for more of this a good thing? The answer, from the JS article:
As increasing individual responsibility for medical bills becomes more widespread, the market will find ways to adjust [. . .]. One sign of that is the formation last year of Health Payment Systems Inc. The Milwaukee company hopes to act as a collection agency for health care providers by paying them a discount for outstanding bills and then collecting the bills on its own.Welcome to the growth industry of the year: Collecting unpaid medical bills. I guess that's good news after all.
As part of its service, HPS plans to offer consumers a detailed monthly statement of outstanding bills and other information, said Bruce Lefco, chairman and chief executive officer. "We are going to work particularly on the issue of educating the consumer," Lefco said. He sees it as a growth business.